VLTESTI
VLTESTI specifies to SyncSort how to process variable-length records that do not contain
all specified INCLUDE or OMIT fields. VLTESTI applies to the INCLUDE and OMIT
control statements as well as OUTFIL and JOINKEYS INCLUDE/OMIT processing.
The delivered default of 0 instructs SyncSort to terminate if a record does not completely
contain all INCLUDE or OMIT fields. A WER250A critical error message is generated to
indicate this condition.
When VLTESTI=1 is specified, a record that does not completely contain all INCLUDE/
OMIT fields is treated as having failed the comparison. SyncSort will omit the record if
INCLUDE is being used or include the record if OMIT has been specified.
When VLTESTI=2 is specified, SyncSort will treat comparisons to fields not completely
contained within the record as false and decide a record?s status for inclusion or omission
from fields that are available. If all fields are not present, the record will be processed as
having failed the comparison. SyncSort will omit the record if INCLUDE is being used or
include the record if OMIT has been specified.
Cannot be used with Tape Sort.

I am not able to understand the diffrence in the usage when VLTESTI=1 and VLTESTI=2

Does n't the above description from the manual make any sense? As per my understanding, it says something like this.

VLTESTI=1: If any of the comparison-fields is not present in a VB record, the record fails the comparison, hence it will be included if OMIT is specified and omitted if INCLUDE is specified in the control card.

VLTESTI=2: Even if one of the comparison-fields is n't present in a VB record, the record does not fail the comparison as in the case of VLTESTI=1, here still it will check for fields that are available and decide whether the record has to included or omitted depending on the comparison result from fields that are present.